In Victoria, tobacco is grown along the river valleys
of the Ovens, King and Kiewa Rivers and their tributaries in North East
Victoria.
It has been a major crop grown in the Myrtleford area for many years

Tobacco is an important crop in Victoria with 130 growers producing an
average of 4 million kilograms each season. This equates to a farm gate
value of $27 million. This tobacco is produced on approximately 1400 hectares.
All this tobacco is

manufactured domestically and the multiplier effect on employment and
manufacturing investment is significant.

Tobacco is a member of the family Solonaceae, the same family as potatoes
and tomatoes. In Australia, flue cured tobacco (Nicotiana tabacum) is
the only type of tobacco grown.

Tobacco was first grown shortly after the first fleet arrived in Sydney,
but these early attempts were largely unsuccessful. Interest in tobacco
growing increased in the early 1930's following the introduction of American
flue cured varieties. Areas with suitable soils and climate were identified
and considerable expansion occurred. This expansion was encouraged by
both State and Federal Governments in the 1940s, '50s and early '60s.
Despite this, between 1932 and 1948 the area planted in Victoria declined
from over 4,800 to 400 hectares.

In 1936 the Local Leaf Content Scheme was introduced by the Commonwealth
Government as a form of support to the industry. This scheme required
manufacturers to use a set amount of locally grown tobacco. This amount
was initially 7.5%, which increased to 28.5% in 1960 and increased to
57% in 1977.

Expansion of production in the late 1950's and early 60's resulted in
the over-production of tobacco and an increase of production into areas
less suited to the growth of high quality tobacco. Poor tobacco was no
longer saleable and many growers faced financial difficulties, such as
in 1961 when 2000 tonne was left unsold.

Faced with a difficult marketing situation, State and Federal Governments,
growers and manufacturers agreed to a Tobacco Industry Stabilisation Plan
(TISP) which commenced operation in 1965.

Constitutionally, powers to control production lie with the State Governments
whilst tariff setting is a Commonwealth responsibility. Thus in order
to implement a national TISP that involved supply controls, statutory
usage requirements and a tariff, there was a requirement for separate
but complementary State and Federal legislation.

At the Federal level, the Tobacco Marketing Act 1965, gave the Australian
Tobacco Board, (later changed to the Australian Tobacco Marketing Advisory
Committee) its basis. An import tariff was also introduced which gave
further protection to the industry.

At the State level, the Marketing of Primary Products Act 1958 gave
a statutory marketing authority (the Tobacco Leaf Marketing Board of Victoria
(TLMB)

the authority to control production through a quota system and to be
solely responsible for marketing tobacco on behalf of growers. All tobacco
grown was vested in the TLMB. The Victorian Tobacco Leaf Stabilisation
Act 1966 was also introduced and complimented the Federal Tobacco Marketing
Act.

In December 1993 the Victorian Government announced a restructure package
which was built around a $3 million grant, combined with a plan to introduce
the Tobacco Leaf Industry (Deregulation) Act 1994 which repealed the Victorian
Tobacco Leaf Stabilisation Act 1966 and the Marketing of Primary Products
Act 1958. As part of this restructure, a number of quota holders in marginal
growing areas voluntarily relinquished their quotas to the State Government
for $2.00 per kilogram and import tariffs were reduced to zero. As part
of this restructure, $5.8 million of Government (State and Commonwealth),
manufacturer and grower contributed funds went towards relocation of a
manufacturer owned green leaf threshing plant from Melbourne to Myrtleford,
and transfer of the ownership of this plant to the Tobacco Co-Operative
of Victoria (TCV). The threshing plant was operational at the start of
the 1996 season.

The Tobacco Leaf Industry (Deregulation) Act 1994 was also the mechanism
through which the assets of the TLMB were transferred to the new Tobacco
Co-Operative of Victoria, which occurred in September 1994.

Tobacco growers in Victoria are all shareholders of the TCV, and can
produce for sale an amount of tobacco which equates with the number of
shares held. This share arrangement has replaced the quota system which
operated under the TLMB. The amount of tobacco produced per share is set
at the start of each growing season after contracts are negotiated with
manufacturers to supply them with tobacco. The TCV also threshes tobacco
under contract to manufacturers. Growers who produce high quality leaf
have been able to stay in the industry under these arrangements and have
been able to consolidate and increase production.

Brought to you courtesy of The Tobacco Co-Operative of Victoria Ltd.
and Stonesthrow Communications

Please note: This publication is
intended as general information only. The growing of tobacco in Australia
is now regulated by the Australian Taxation Office (ATO). Permission for
commercial or private cultivation or manufacture of tobacco should be
sourced from Bob Harkins, Compliance Team Manager, (02) 9374 8501.

The advice provided is intended as a source
of information only. The TCV and its officers do not guarantee that the
advice is without flaw of any kind or is wholly appropriate for your particular
purposes and therefore disclaims all liability for any error, loss or
other consequence, which may arise from you relying on this advice.

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